06.29.08

A Possible LGBT Tax Loop-hole

Posted in Uncategorized at 3:13 pm by admin

I recently learned of an interesting loop-hole in the tax law that may help LGBT’s. If you supporting your partner or caring for someone who is ill and that person makes a minimal income, you may be able to claim them as a dependent. You may also be able claim yourself as head of household.

An example would be if one partner is in school or you are caring for someone who is ill and if they earn less than the threshold amount, which is the exemption amount for the particular tax year (Currently $3,250.00). Claiming such a dependent could save thousands in taxes.

To qualify for the “dependency exemption,” the dependent would have to use the test for “qualifying relative.” The person must reside with you the entire year as a member of your household, and the relationship “must not violate local law.” A violation of local law, for example would include the instance where your partner is still married and it may violate local law to co-habitate with a married person. Further, the dependent may not claim themselves on their own tax return.

The rules for “head of household” state that to qualify for head of household you must be unmarried on the last day of the year, you must pay more than half of the upkeep for the home for the year, and the “qualifying person” must live with you for more than half of the year. If you qualify for head of household, your tax rate will most likely be lower than if you file as a single and you may get a higher standard deduction.

I am not an accountant, so if you have any further questions, please refer to Publication 501, Exemptions, Standard Deductions, and Filing Information. The website is located at IRS or contact a tax professional.

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